Rules on higher tariff for hot, cold-rolled coils okayed

The Cabinet-level Tariff and Related Matters (CTRM) committee and the Board of Investments (BOI) have finally approved the implementing rules and regulations that would govern the implementation of Executive Order 375 which would increase the tariff rates on hot and cold rolled coils from three percent to seven percent and provide tariff protection for Global Steel Philippines.

The IRR, however, still has to be confirmed by the National Economic and Development Authority (NEDA) Board.

BOI managing head Elmer C. Hernandez explained that the IRR sets two specific conditions which would trigger the implementation of EO 375.

Compliance with either of the two conditions would be enough to trigger the implementation of EO 375.

One condition is if Global Steel Philippines has attained 50 percent of its BOI-registered capacity for HRC and CRC.

The other condition is if 50 percent of average Philippine importation volume of HRC or CRC for five years immediately prior to the start of operations of GSP has been met.

The government had previously lowered the tariff rates on HRC and CRC while GSP had not yet been in commercial operation.

However, GSP has announced that its HRC and CRC lines are in commercial operation, hoping to thereby trigger the government’s commitment to increase the tariff on HRC once GSP is commercially operational.

GSP corporate head Sangram Mohanty said the Iligan-based steel firm’s HRC and CRC lines are fully operational.

However, Mohanty admitted that Global Steel is prioritizing CRC production in response to local demand.

"Production is focused on CRC lines in view of domestic market requirements," Mohanty said.

He assured though that "the HRC line has been commissioned and its production capacity has already been established internally."

The TRM Committee had told GSP that it would only apply the approved increase in tariff rates on hot and cold rolled coils once GSP, formerly National Steel Corp., becomes commercially operational.

The TRM would raise the tariff rate on HRC and CRC to seven percent from three percent, while maintaining the zero percent tariff rate on tinplates.

TRM sources said that they would not merely take Global Steel’s word about its commercial operation, but would send a technically competent team to verify if indeed the Indian-owned steel firm is already commercially operating.

Hernandez explained that commercial operation as defined by the BOI is different from commercial operation defined by the TRM.

Commercial operation for BOI is intended to allow GSP to avail of its tax incentives.